Rupee ends slightly higher at 85.52/$; falls for second straight week
The Indian rupee ended slightly higher at 85.52 against the US dollar on Friday, showing marginal recovery after falling for two consecutive weeks. Despite the intraday gains, the rupee recorded its second straight weekly decline, weighed down by sustained dollar strength and global economic concerns.
Investors remain cautious as the US dollar continues to benefit from expectations of further interest rate hikes by the Federal Reserve. This has increased demand for the dollar, putting pressure on emerging market currencies like the rupee.
“The rupee’s modest gain today is primarily technical, reflecting short-term dollar weakness,” said Sunil Sharma, Chief Economist at HDFC Securities. “However, the broader trend still favors the dollar due to persistent global uncertainties.”
Foreign institutional investors (FIIs) continued to exhibit cautious behavior, with mixed inflows and outflows in the Indian capital markets adding to currency volatility. Additionally, crude oil prices, a major factor affecting the rupee, remained elevated, further straining the local currency.
The Reserve Bank of India (RBI) intervened in the forex markets to stabilize the rupee, but significant pressure from external factors limited the gains. Market participants are now closely watching upcoming economic data, including inflation figures and trade balance reports, for clues on the rupee’s near-term trajectory.
Analysts expect the rupee to remain volatile in the short term as global economic conditions evolve, especially with uncertainties surrounding US monetary policy and geopolitical tensions.
Importers and exporters are advised to hedge currency risks given the rupee’s current fluctuations. Meanwhile, domestic investors are urged to keep an eye on the currency movement as it impacts broader market sentiment.
In conclusion, while the rupee ended slightly higher on the day, its second consecutive weekly fall highlights ongoing challenges posed by global market dynamics and underscores the need for prudent forex risk management.
